The EUR/USD pair went higher during the session on Friday, but as you can see could not stay above the crucial 1.34 level. I believe that level is the beginning of significant resistance all the way to the 1.35 handle, so it might be a bit of a fight to get above there. Nonetheless, this market does look like it has somewhat of an upward bias which tells me that a lot of currency speculators out there believe that the Federal Reserve will in fact not be able to taper off of quantitative easing during the month of September, possibly even during the month of October.
If that's the case, the beneficiary without a doubt will be the Euro. After all, the Europeans just exited a recession so it makes sense that the value the currency goes higher anyway. Going forward, I think that the 1.35 level will be crucial, because we can get above that we should head the 1.40 before it's all said and done.
Federal Reserve watch
If you are currently trader, you currently are watching the Federal Reserve to figure out what they're going to do as far as quantitative easing. Quite rightly, that's the only game in town at this moment in time. It is because of that we see several currency pairs grinding away in a somewhat meaningless haphazard kind of direction. Although that's the case in this market as well, you can see that we are definitely are going higher over time and that of course mean something that you can focus on.
Because of this, it appears that there is an underlying bid to the Euro, and because of that I believe that the market will eventually breakout, or at least is trying to prepare itself to do so. Of course, the Federal Reserve could surprise everyone and start tightening right away, but between now and then there's going to be a whole lot of guessing. Guessing is the easiest way to lose money in the Forex markets, so quite frankly I'm not overly pressed to put a position on in this market at the moment.
